NEW YORK--(BUSINESS WIRE)--Fitch Ratings has assigned an 'A' rating to Oglethorpe Power
Corporation's (OPC) $250 million first mortgage bonds, series 2014A,
which are scheduled to price via negotiation in June 2014. Proceeds will
be used for the long-term financing of general and environmental capital
expenditures of existing generation and to redeem a portion of
short-term debt.

The bonds are secured by a first mortgage lien on substantially all the
cooperative's owned tangible and certain intangible assets. The CP
notes, when issued, are unsecured obligations of OPC.

KEY RATING DRIVERS

SOLID INDUSTRY POSITION: OPC is the largest generation and transmission
(G&T) electric cooperative in the nation, providing wholesale power
supply to 38 members who collectively serve 1.8 million customer meters
and 4.1 million people. Power is supplied pursuant to joint and several,
take-or-pay power sales contracts that extend to Dec. 31, 2050.

STATUS OF NUCLEAR PROGRAM: The Negative Outlook reflects concerns that
the confluence of higher nuclear project construction costs, delayed
commercial operation and on-going contractor litigation could reduce
OPC's financial and operating flexibility to levels no longer consistent
with the current rating. OPC recently closed on a $3.057 billion
Department of Energy (DOE) guaranteed loan for the Vogtle project, which
is viewed as constructive.

SUPPORTIVE FINANCIAL POLICIES: OPC's board has adopted supportive
policies designed to bolster its financial profile during its sizable
capital program. Fitch views OPC's targeted margins for interest ratio
(MFI) of 1.14x, compared with a 1.10x requirement under the mortgage
indenture, and its ability to recover costs, including fuel and
purchased power, in a timely manner, favorably.

FINANCIAL METRICS AND LEVERAGE TRAIL MEDIANS: Fitch-calculated ratios
for OPC, in totality, are below average for its rating category. While
debt service coverage was a reasonable 1.44 in 2013, total debt to FADS
(13.5x) remains elevated and equity to capitalization (8.8%) continues
below average. Liquidity metrics returned to more acceptable levels in
2013, from reduced levels the year before.

POTENTIAL FOR STABLE OUTLOOK: Vogtle-related issues remain a critical
factor in Fitch's analysis of OPC. Greater certainty of meeting
construction timelines and achieving cost estimates could support
reinstatement of the Stable Outlook.

DETERIORATION OF FINANCIAL PRACTICES AND RATIOS: A weakening of
financial policies and initiatives that have supported financial metrics
in recent years, would be viewed negatively.

CREDIT PROFILE

OPC is the largest G&T cooperative in the U.S. in terms of assets
($9.095 billion at Dec. 30, 2013) and energy generation (21,072 GWH in
2013). OPC's fleet of generating units totals 7,747 MW of
summer-planning reserve capacity, including 712 MW of combustion
turbines (Smarr EMC assets) and 1,240 MW at the Smith Facility, which is
currently being used to sell power off-system until 2016. In 2013, OPC
supplied 51% of the members' retail energy requirements.

The most significant component of the OPC capital plan is its
participation in the development of two additional units (units #3 and
#4) at the existing Plant Vogtle site. The units will use the new
Westinghouse AP1000 technology and, combined, these new units will
provide OPC with 660 MW of additional capacity.

Construction activity has been on-going at the site since 2009 and
accelerated following the NRC approval of the final AP 1000 reactor
design in February 2012. OPC and the co-owners previously revised the
expected commercial operation dates for the units from April 2016 and
2017 to the fourth quarter of 2017 and 2018, respectively, and increased
the estimated total cost of the OPC's project share from $4.2 billion to
$4.5 billion (including allowance for funds during construction and
contingencies). Commercial responsibility for the revised commercial
operation dates and additional costs remain in dispute. OPC's share of
the amount specified in the contractor's claim is $280 million.

SIZEABLE CONSTRUCTION BUDGET

As of Dec. 31, 2013, OPC's investment in the new Vogtle units totaled
$2.1 billion. In addition to the $725 million initial advance under its
DOE loan agreement, at a fixed interest rate of 3.867% through Feb. 20,
2044, OPC previously issued $1.4 billion of taxable first mortgage
bonds; and the utility expects that it will finance any additional
project costs in the capital markets, in excess of the DOE funding.

OPC's total projected capital expenditures for 2013-2016 remain sizable
and are currently estimated at $2.34 billion. The estimate assumes 85%
will relate to future and existing generation, 13% for nuclear fuel and
the rest for environmental compliance and general plant. Environmental
compliance projects principally relate to the coal-fired plants Scherer
and Wansley.

FINANCIAL PROFILE STEADY

Net margins totaled $41.5 million in 2013, which allowed OPC to
successfully achieve the 1.14 margins for interest ratio approved by the
board. Net margins at OPC continue to gradually improve reflecting the
cooperative's strategy of increasing earnings to offset the impact of
construction-related borrowings. Fitch calculated debt service coverage
(DSC) rose to 1.44x in 2013, up from 1.32x in 2012, but still remains
below previous levels. The board approved an MFI ratio of 1.14x for
2014, in line with previous years' target. However, even with this
coverage policy, the G&T will likely continue to experience a reduced
equity ratio and high debt-to-FADS for several more years due to heavy
borrowings. Members' financial results are satisfactory.

DEBT PROFILE

At March 31, 2014, OPC had $6.9 billion of long-term debt outstanding
under its first mortgage indenture. At completion of Vogtle, OPC expects
to have $9.2 billion of debt outstanding. Short-term borrowings fell
considerably in 2013 to $279.4 million from $569.5 million the year
before, and as a percentage of total debt outstanding.

COMMERCIAL PAPER PROGRAM

OPC's commercial paper (CP) notes are authorized up to $1.265 billion.
OPC had $269.7 million of CP outstanding at the end of March 31, 2014.
The CP notes rank pari passu with all other unsecured and unsubordinated
indebtedness of OPC. Net proceeds from the sale of notes are used to
meet working capital requirements and for general corporate purposes.
Maximum maturity is 270 days. At March 31, 2014, total available liquid
resources divided by total maximum potential liquidity requirement
equaled 1.50x.

The CP notes are primarily supported by high-quality, highly liquid
assets in the form of OPC's own cash and investments, and access to the
cooperative's $1.265 billion syndicated line of credit. The credit
facility can be used for general corporate purposes, issuing letters of
credit and backing up the CP. The credit facility has a current
expiration date of June 8, 2015.

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